Business Studies Unit 2 AQA

This booklet was made by myself combined from a range of AQA resources & books. It covers all the topics in the specification e.g. Finance, People In Business, Operations Management and Marketing. Hope it helps! Any questions just ask! ox

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Page 2

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Using budgetsBudget ­ a detailed plan of income and expenses expectedover a period of time.A good budget has the following features: Consistent with the aims of the business Sets challenging but realistic targets Is flexible to any changes Advantages Disadvantages Provides direction and Allocations may be incorrect coordination as it ensures the therefore, a business will budgets are geared towards the experience unforeseen changes aims of the business. e.g. if the expenditure budget is insufficient this can demotivate staff.…read more

Page 3

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Variances ­ difference between planned and actual figureachieved/ (budget figure ­ actual figure)Favourable variances: Profit is higher than expectedSales is higher than expectedExpenditure is lower than expectedAdverse variances: Profit is lower than expectedSales is lower than expectedExpenditure is higher than expected Why businesses use variances to help make decisions? Identifies whether the business is under or over their budget in terms of costs and sales Gives the business a clear idea about their progress which enables them to…read more

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Bank overdraft: this is easy to arrange and flexible, however interest payments tend to vary making it harder to budget. Shortterm loan: this is at a lower interest rate than overdrafts and the repayments are also fixed, however collateral security is needed which can be seen as a risk. Factoring: this can help to reduce the risk of bad debts as debts won't be required to be chased up saving time and money e.g. administration costs.…read more

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Page 7

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Reduce costsAdv: leads to a higher profit margin on each item sold Dis:decrease in quality can lead to a fall in demand 3) Increase quantityAdv: this attracts sales and makes better use of capacity Dis:can cause fixed costs to rise e.g. marketingOther ways to increase profit: Product development By introducing new, fresh products draws customers in. Marketing Successful marketing strategies e.g. sponsor from popular brand can encourage customers to buy more of the business's products.…read more

Page 8

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Less: Variable costsLess: Cash outflowsLess: fixed costs= Net cash flow= Net profit 4) Distinction between cash and profit Cash is the physical existence of money within the business, which can be generated by selling items of stock. However, not all of the cash is converted into profit, as the firm needs to meet the direct cost of selling the items as well as indirect costs e.g. rent, rates and salaries.…read more

Page 9

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PEOPLE IN BUSINESS 1) Key elements of organisational structureOrganisational structure ­ the way a business carries out itsactivitiesLevels of hierarchy ­ the number of different supervisory andmanagement levels between the shop floor and chief executivein an organisation An organisation's structure is usually shown in an organisation chart, which illustrates the connection between people in an organisation. The organisational hierarchy refers to the levels of authority and accountability in the organisation.…read more

Page 10

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This is the number of subordinates a manager is responsible for.…read more